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Multifamily Energy Efficiency and Housing Affordability Program

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Purpose of Program

The purpose of the Multifamily Energy Efficiency and Housing Affordability-EmPOWER
Program is to promote energy efficiency and affordability in the State’s multifamily
rental housing developments for low and moderate income households. These improvements
are intended to reduce a building’s energy use and lower utility bills for occupants.

Under this program, the Maryland Department of Housing and Community Development will provide loans and grants with flexible
terms for the purchase and installation of energy efficiency improvements in affordable
multifamily rental housing developments. Multifamily Energy Efficiency and Housing Affordability Program​-EmPOWER funds may also be provided
for energy audits/studies to determine the appropriate energy conservation measures
for a building. The program is being undertaken as part of the State’s efforts to:
1) promote energy efficiency and renewable energy sources; and 2) create and preserve
affordable rental housing opportunities. The department has a total of $12.5 million available
for this program.

Eligible Types of Housing

Multifamily Energy Efficiency and Housing Affordability-EmPOWER funds are restricted to affordable multifamily rental properties.
“Affordable” means rental housing with existing income or rent restrictions, or
housing with units that serve tenants with low to moderate incomes, as determined
by the department. Multifamily rental housing may include apartment buildings, townhouses,
single-family homes, single room occupancy and shared housing facilities with
five (5) or more units. Eligible applicants for Multifamily Energy Efficiency and Housing Affordability-EmPOWER funds include non-profit
organizations, for-profit organizations and governmental entities.

Multifamily Energy Efficiency and Housing Affordability-EmPOWER is funded by utility companies serving Maryland and regulated by the
Public Service Commission. Accordingly, only individually metered projects
located in the service territories of the following utility companies are eligible
for funding (See the Service Territory Map).

Baltimore Gas and Electric Company

Delmarva Power

Allegheny Power

Potomac Electric Power Company

Southern Maryland Electric Cooperative, Inc.​

Each of these utility companies has entered into a Memorandum of Agreement with the department which further dictates the terms of financing eligible projects.

Eligible Activities

Multifamily Energy Efficiency and Housing Affordability-EmPOWER funding is available to two types of projects:

“Pipeline” – affordable multifamily projects in process for other department rental financing
for either new construction or acquisition and rehabilitation.

Multifamily Energy Efficiency and Housing Affordability-EmPOWER funds may only fund the costs of energy conservation measures which
result in the reduction of electrical (kWh) usage. Energy conservation measures
which result in savings associated with oil or water usage are not eligible for
funding under Multifamily Energy Efficiency and Housing Affordability-EmPOWER. Energy conservation measures which result in savings
associated with natural gas usage are only eligible for funding under Multifamily Energy Efficiency and Housing Affordability-EmPOWER
in the BG&E service territory.

Multifamily Energy Efficiency and Housing Affordability-EmPOWER funds will be used to make loans and grants for the purchase and installation
of cost effective energy conservation measures identified by an Energy Audit. The department
will target (but not be limited solely to) energy conservation measures with a demonstrated
Savings to Investment Ratio of 1.5. Selected energy conservation measures
are expected to result collectively in a 15 percent or greater improvement in the
electric efficiency of eligible properties.

Energy Audits and Auditors (Rehabilitation Only)

For projects which involve the rehabilitation of existing multifamily rental housing,
the proposed energy conservation measures must be based on an Energy Audit completed
in a format that meets the department’s requirements (see the department’s Qualified Auditor List).
In order to establish best practices and guidance for conducting the energy analysis
required for multifamily building energy improvement projects the department has adapted an
audit guide (see Multifamily Energy Audit Guide).

The energy auditor must be certified by the Building Performance Institute (BPI)
Multifamily, and must also demonstrate a minimum of two (2) years of experience
completing energy audits/studies on multifamily residential buildings.

The Energy Audit must provide an estimate of operating expense savings to
the property owner and utility expense savings to the tenant that are expected
to result from identified energy conservation measures.A breakdown of tenant vs.
owner savings must be reported must be noted in all measures. The NEEP Mid-Atlantic Technical Reference Manual
3.0 will be used as verification of savings
reported when selecting qualified measures. The TRM3 should be used in calculating
the estimated
useful life of measures.​

The cost of the energy audit may be included as part of an overall award of Multifamily Energy Efficiency and Housing Affordability-EmPOWER
funds for energy conservation measures at a property.

Funding Eligibility

Projects which involve the rehabilitation of existing multifamily rental
housing are eligible for Multifamily Energy Efficiency and Housing Affordability-EmPOWER funding for qualified energy conservation
measures as detailed in an acceptable Energy Audit as follows:

100% of the cost of qualified energy conservation measures with Savings to Investment
Ratio at or above 1.5; or Cost Effectiveness Ratio at or above 10.0;

Partial funding (“cost sharing”) of qualified energy conservation measures with
a Savings to Investment Ratio less than 1.5 or Cost Effectiveness Ratio less than 10.0 when Multifamily Energy Efficiency and Housing Affordability-EmPOWER funding is matched
with other funds to bring the item(s) into Savings to Investment Ratio or Cost Effectiveness Ratio criteria compliance.

Only energy conservation measures that produce electrical savings (kWh) are eligible
for funding, except for projects located in the BG&E service territory, where measures
that produce natural gas savings are also eligible.

Projects which involve new construction of multifamily rental housing are
eligible for Multifamily Energy Efficiency and Housing Affordability-EmPOWER funding only for the incremental costs of qualified energy
conservations measures that exceed current Energy Code and Energy Star standards.
For new construction projects, In lieu of an energy audit a detailed report must
be provided with a
new construction energy measure comparison chart
which identifies the energy conservation measures required by applicable building
codes, and compares the estimated kWh usage and cost for the code-required energy
conservation measures with the estimated kWh usage and cost for the energy conservation
measures proposed for the project. As a general rule, new construction projects
will qualify for less Multifamily Energy Efficiency and Housing Affordability-EmPOWER funding per unit than projects which involve
rehabilitation.

Projects which previously received energy efficiency funding from the department may be eligible
for Multifamily Energy Efficiency and Housing Affordability-EmPOWER funds for additional energy conservation measures, and will be
evaluated on a case by case basis.

How to Apply

Applications for Multifamily Energy Efficiency and Housing Affordability-EmPOWER funding may be submitted at any time. Multifamily Energy Efficiency and Housing Affordability-EmPOWER
applicants who are not seeking other department financing (“Non-Pipeline” projects) should
complete the Multifamily Energy Efficiency and Housing Affordability-EmPOWER application along with the supporting documentation and submit it to the department as outlined on the
application. PDF files are preferred.

For projects seeking Multifamily Energy Efficiency and Housing Affordability-EmPOWER awards in addition to other department rental
housing financing (“pipeline projects”), the Multifamily Energy Efficiency and Housing Affordability-EmPOWER application and review
process will be integrated with the department’s application, underwriting and due diligence
for other rental housing financing. A separate Multifamily Energy Efficiency and Housing Affordability-EmPOWER application is not required for projects seeking
other department financing.

All applications should clearly identify the amount of Multifamily Energy Efficiency and Housing Affordability-EmPOWER funding requested
in accordance with the conclusions of the Energy Audit and within the parameters
outlined above in Funding Eligibility.

Applications will be accepted on an on-going basis and evaluated based on readiness
to proceed and how the project furthers both the energy efficiency and the housing
affordability purposes of the program.

Application Processing and Funding Requirements

Complete applications will be assigned to a department underwriter and construction management
officer for further review. Initial review will include review of a Dun and Bradstreet
credit analysis of the applicant, confirmation that the project is located in a
Priority Funding Area (PFA), historic review of the property in conjunction with
the Maryland Historic Trust, and a review of the applicant’s prior experience and
performance (if any) with the department.

The assigned underwriter will also confirm the affordability status of the project
with the applicant. For projects with existing affordability restrictions, a minimum
of five (5) years of affordability must remain, otherwise an extension of affordability
will be required. If a property has no existing affordability restrictions, a 5
year period of affordability will be imposed on the property.

For “non-pipeline” projects, department staff will seek to issue a Multifamily Energy Efficiency and Housing Affordability-EmPOWER Reservation
Letter within 30-45 days of the receipt of the application. For “pipeline” projects,
a Reservation Letter will typically be issued within 60-75 days of the receipt of
the application. Upon issuance of a Reservation Letter, the applicant will be required
to finalize cost estimates and select a contractor(s) to complete the proposed energy
conservation measures. A Reservation Letter is not a commitment to provide funding
to a project.

Upon the receipt of final contractor pricing, the Multifamily Energy Efficiency and Housing Affordability-EmPOWER funding award will
be finalized with adjustments made to eligible amounts based on a recalculation
of Savings to Investment Ratio and Cost Effectiveness Ratio reflective of final pricing. A Multifamily Energy Efficiency and Housing Affordability-EmPOWER Commitment Letter
will then be issued by the department. Closing on Multifamily Energy Efficiency and Housing Affordability-EmPOWER funding will occur after the department
has received, reviewed and approved all required documentation as outlined in the
Commitment Letter.

Multifamily Energy Efficiency and Housing Affordability-EmPOWER funds will be disbursed during the course of construction as work
is completed and approved by the department. All disbursements will be subject to a 10% retainage
requirement. Requisitions for Multifamily Energy Efficiency and Housing Affordability-EmPOWER funds must be completed on department Requisition Forms and
will require supporting documentation verifying the installation and specifications
of qualified energy conservation measurements.

Projects which receive Multifamily Energy Efficiency and Housing Affordability-EmPOWER funds will be required to complete a Final Report
upon completion of all work. In addition, sponsors are required to enroll the assisted
project in the Environmental Protection Agency’s Portfolio Manager
and track the project’s energy usage (both landlord and tenant) for at least 12
months following completion of work. It will be necessary to obtain each customer’s
consent to release utility usage (see the Customer Energy Usage Release
Form).